What Happens if the US Adopts Bitcoin

As bitcoin continues to soar in value, many in government, including the president-elect Donald Trump, are angling to make the top crypto a part of the national reserves.

The Big Bet: The incoming Trump administration is far more accepting of the crypto industry than Biden’s, which could give the industry a more prominent seat at the policy table… and even put it on track for official acceptance as a currency all around the world.

Behind the Crypto: There are two prevailing plans to make bitcoin a bigger part of the US government, according to Axios.

• The Trump Plan: President-elect Trump wants to keep the 198,000 bitcoins (value of about $19 billion) already held by the US Marshals Service. Instead of selling it to compensate victims of crime or pay for law enforcement, Trump just wants to keep it.
• The thinking is that the growing bitcoin stash could be similar to our gold reserves, of which the US holds 8,134 tons (which holds little purpose). Where do you think we’ll establish the Fort Knox of bitcoin?

• The Lummis Plan: Coined after Senator Cynthia Lummis (R.-Wyo), the plan calls for the US to buy one million bitcoins that the government can hold for 20 years unless used to pay down federal debt.
• Gold also plays a part in this plan. Lummis says the government majorly undervalues its gold compared to the market price. So, if the Federal Reserve simply values it right, that would give the US enough of a windfall to cut a check for the outstanding bitcoin.

Final Ledger: Hypothetically, either plan is sound if the government is determined to get in on bitcoin, although Loomis’ plan hinges on the long-term viability of the crypto (specifically, whether the unmasking of founder Satoshi Nakamoto craters the whole project). Some people, like Cato Institute economist George Selgin, think the plans are a bust because he doubts the government will ever actually sell the bitcoin — we’ve never sold our gold because of how up in arms investors would get. The same thinking applies to crypto.

Still, El Salvador is already in on the bitcoin craze, states like Texas and Pennsylvania are considering it, and countries like Japan and Russia are thinking about doing the same… so maybe the adoption of one of these plans is inevitable.